Defunded Islamic school weighs options

Australia's largest Islamic school is weighing its legal options after losing a Federal Court appeal against a $19 million funding cut.

The Malek Fahd Islamic School on Tuesday lost a crucial bid to maintain its federal funding which was stripped when the Administrative Appeals Tribunal found it was being run for profit in breach of education funding laws.

The Sydney school, which educates about 2400 students on three campuses, is now considering launching High Court action and pleading its case directly to the education minister.

"It's the students and the staff and the parents who are being penalised for things that happened well before this board was in place," the school's board chair David Bennett said.

"We want to try and resolve this properly and not penalise these students in any way shape or form."

The school properties had been owned by the Australian Federation of Islamic Councils, which improperly charged inflated rents to make money from the school.

A new school board was installed in 2016 and took steps to terminate a range of inappropriate arrangements AFIC had saddled it with.